Surface Transportation Investment Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 880 To amend the Internal Revenue Code of 1986 to repeal loopholes for major integrated oil companies, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 30, 2019 Ms. BROWNLEY of California introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Transportation and Infrastructure, for a period to be subsequently de- termined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to repeal loopholes for major integrated oil companies, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Surface Transportation Investment Act of 2019’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 2 •HR 880 IH TITLE I—CLOSE BIG OIL TAX LOOPHOLES Sec. 2. Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers. Sec. 3. Limitation on deduction for intangible drilling and development costs; amortization of disallowed amounts. Sec. 4. Limitation on percentage depletion allowance for oil and gas wells. Sec. 5. Limitation on deduction for tertiary injectants. Sec. 6. Modification of definition of major integrated oil company. TITLE II—TRANSPORTATION BLOCK GRANTS Sec. 201. Use of revenue for transportation block grants. TITLE I—CLOSE BIG OIL TAX 1 LOOPHOLES 2 SEC. 2. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 3 APPLICABLE TO MAJOR INTEGRATED OIL 4 COMPANIES WHICH ARE DUAL CAPACITY 5 TAXPAYERS. 6 (a) IN GENERAL.—Section 901 of the Internal Rev- 7 enue Code of 1986 is amended by redesignating subsection 8 (n) as subsection (o) and by inserting after subsection (m) 9 the following new subsection: 10 ‘‘(n) SPECIAL RULES RELATING TO MAJOR INTE- 11 GRATED OIL COMPANIES WHICH ARE DUAL CAPACITY 12 TAXPAYERS.— 13 ‘‘(1) GENERAL RULE.—Notwithstanding any 14 other provision of this chapter, any amount paid or 15 accrued by a dual capacity taxpayer which is a 16 major integrated oil company (within the meaning of 17 section 167(h)(5)) to a foreign country or possession 18 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 3 •HR 880 IH of the United States for any period shall not be con- 1 sidered a tax— 2 ‘‘(A) if, for such period, the foreign coun- 3 try or possession does not impose a generally 4 applicable income tax, or 5 ‘‘(B) to the extent such amount exceeds 6 the amount (determined in accordance with reg- 7 ulations) which— 8 ‘‘(i) is paid by such dual capacity tax- 9 payer pursuant to the generally applicable 10 income tax imposed by the country or pos- 11 session, or 12 ‘‘(ii) would be paid if the generally ap- 13 plicable income tax imposed by the country 14 or possession were applicable to such dual 15 capacity taxpayer. 16 Nothing in this paragraph shall be construed to 17 imply the proper treatment of any such amount not 18 in excess of the amount determined under subpara- 19 graph (B). 20 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur- 21 poses of this subsection, the term ‘dual capacity tax- 22 payer’ means, with respect to any foreign country or 23 possession of the United States, a person who— 24 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 4 •HR 880 IH ‘‘(A) is subject to a levy of such country or 1 possession, and 2 ‘‘(B) receives (or will receive) directly or 3 indirectly a specific economic benefit (as deter- 4 mined in accordance with regulations) from 5 such country or possession. 6 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 7 For purposes of this subsection— 8 ‘‘(A) IN GENERAL.—The term ‘generally 9 applicable income tax’ means an income tax (or 10 a series of income taxes) which is generally im- 11 posed under the laws of a foreign country or 12 possession on income derived from the conduct 13 of a trade or business within such country or 14 possession. 15 ‘‘(B) EXCEPTIONS.—Such term shall not 16 include a tax unless it has substantial applica- 17 tion, by its terms and in practice, to— 18 ‘‘(i) persons who are not dual capacity 19 taxpayers, and 20 ‘‘(ii) persons who are citizens or resi- 21 dents of the foreign country or posses- 22 sion.’’. 23 (b) EFFECTIVE DATE.— 24 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 5 •HR 880 IH (1) IN GENERAL.—The amendments made by 1 this section shall apply to taxes paid or accrued in 2 taxable years beginning after the date of the enact- 3 ment of this Act. 4 (2) CONTRARY TREATY OBLIGATIONS 5 UPHELD.—The amendments made by this section 6 shall not apply to the extent contrary to any treaty 7 obligation of the United States. 8 SEC. 3. LIMITATION ON DEDUCTION FOR INTANGIBLE 9 DRILLING AND DEVELOPMENT COSTS; AMOR- 10 TIZATION OF DISALLOWED AMOUNTS. 11 (a) IN GENERAL.—Section 263(c) of the Internal 12 Revenue Code of 1986 is amended to read as follows: 13 ‘‘(c) INTANGIBLE DRILLING AND DEVELOPMENT 14 COSTS IN THE CASE OF OIL AND GAS WELLS AND GEO- 15 THERMAL WELLS.— 16 ‘‘(1) IN GENERAL.—Notwithstanding subsection 17 (a), and except as provided in subsection (i), regula- 18 tions shall be prescribed by the Secretary under this 19 subtitle corresponding to the regulations which 20 granted the option to deduct as expenses intangible 21 drilling and development costs in the case of oil and 22 gas wells and which were recognized and approved 23 by the Congress in House Concurrent Resolution 50, 24 Seventy-ninth Congress. Such regulations shall also 25 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 6 •HR 880 IH grant the option to deduct as expenses intangible 1 drilling and development costs in the case of wells 2 drilled for any geothermal deposit (as defined in sec- 3 tion 613(e)(2)) to the same extent and in the same 4 manner as such expenses are deductible in the case 5 of oil and gas wells. This subsection shall not apply 6 with respect to any costs to which any deduction is 7 allowed under section 59(e) or 291. 8 ‘‘(2) EXCLUSION.— 9 ‘‘(A) IN GENERAL.—This subsection shall 10 not apply to amounts paid or incurred by a tax- 11 payer in any taxable year in which such tax- 12 payer is a major integrated oil company (within 13 the meaning of section 167(h)(5)). 14 ‘‘(B) AMORTIZATION OF AMOUNTS NOT AL- 15 LOWABLE AS DEDUCTIONS UNDER SUBPARA- 16 GRAPH (A).—The amount not allowable as a 17 deduction for any taxable year by reason of 18 subparagraph (A) shall be allowable as a deduc- 19 tion ratably over the 60-month period beginning 20 with the month in which the costs are paid or 21 incurred. For purposes of section 1254, any de- 22 duction under this subparagraph shall be treat- 23 ed as a deduction under this subsection.’’. 24 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 7 •HR 880 IH (b) EFFECTIVE DATE.—The amendment made by 1 this section shall apply to amounts paid or incurred in tax- 2 able years beginning after December 31, 2019. 3 SEC. 4. LIMITATION ON PERCENTAGE DEPLETION ALLOW- 4 ANCE FOR OIL AND GAS WELLS. 5 (a) IN GENERAL.—Section 613A of the Internal Rev- 6 enue Code of 1986 is amended by adding at the end the 7 following new subsection: 8 ‘‘(f) APPLICATION WITH RESPECT TO MAJOR INTE- 9 GRATED OIL COMPANIES.—In the case of any taxable year 10 in which the taxpayer is a major integrated oil company 11 (within the meaning of section 167(h)(5)), the allowance 12 for percentage depletion shall be zero.’’. 13 (b) EFFECTIVE DATE.—The amendment made by 14 this section shall apply to taxable years beginning after 15 December 31, 2019. 16 SEC. 5. LIMITATION ON DEDUCTION FOR TERTIARY 17 INJECTANTS. 18 (a) IN GENERAL.—Section 193 of the Internal Rev- 19 enue Code of 1986 is amended by adding at the end the 20 following new subsection: 21 ‘‘(d) APPLICATION WITH RESPECT TO MAJOR INTE- 22 GRATED OIL COMPANIES.— 23 ‘‘(1) IN GENERAL.—This section shall not apply 24 to amounts paid or incurred by a taxpayer in any 25 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 8 •HR 880 IH taxable year in which such taxpayer is a major inte- 1 grated oil company (within the meaning of section 2 167(h)(5)). 3 ‘‘(2) AMORTIZATION OF AMOUNTS NOT ALLOW- 4 ABLE AS DEDUCTIONS UNDER PARAGRAPH (1).— 5 The amount not allowable as a deduction for any 6 taxable year by reason of paragraph (1) shall be al- 7 lowable as a deduction ratably over the 60-month 8 period beginning with the month in which the costs 9 are paid or incurred.’’. 10 (b) EFFECTIVE DATE.—The amendment made by 11 this section shall apply to amounts paid or incurred in tax- 12 able years beginning after December 31, 2019. 13 SEC. 6. MODIFICATION OF DEFINITION OF MAJOR INTE- 14 GRATED OIL COMPANY. 15 (a) IN GENERAL.—Section 167(h)(5) of the Internal 16 Revenue Code of 1986 is amended by adding at the end 17 the following new subparagraph: 18 ‘‘(C) CERTAIN SUCCESSORS IN INTER- 19 EST.—For purposes of this paragraph, the term 20 ‘major integrated oil company’ includes any 21 successor in interest of a company that was de- 22 scribed in subparagraph (B) in any taxable 23 year, if such successor controls more than 50 24 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 9 •HR 880 IH percent of the crude oil production or natural 1 gas production of such company.’’. 2 (b) CONFORMING AMENDMENTS.— 3 (1) IN GENERAL.—Section 167(h)(5)(B) of the 4 Internal Revenue Code of 1986 is amended by in- 5 serting ‘‘except as provided in subparagraph (C),’’ 6 after ‘‘For purposes of this paragraph,’’. 7 (2) TAXABLE YEARS TESTED.—Section 8 167(h)(5)(B)(iii) of such Code is amended— 9 (A) by striking ‘‘does not apply by reason 10 of paragraph (4) of section 613A(d)’’ and in- 11 serting ‘‘did not apply by reason of paragraph 12 (4) of section 613A(d) for any taxable year 13 after 2004’’, and 14 (B) by striking ‘‘does not apply’’ in sub- 15 clause (II) and inserting ‘‘did not apply for the 16 taxable year’’. 17 (c) EFFECTIVE DATE.—The amendments made by 18 this section shall apply to taxable years beginning after 19 December 31, 2019. 20 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 10 •HR 880 IH TITLE II—TRANSPORTATION 1 BLOCK GRANTS 2 SEC. 201. USE OF REVENUE FOR TRANSPORTATION BLOCK 3 GRANTS. 4 (a) IN GENERAL.—Subchapter A of chapter 98 of the 5 Internal Revenue Code of 1986 is amended by adding at 6 the end the following new section: 7 ‘‘SEC. 9512. TRANSPORTATION BLOCK GRANT FUND. 8 ‘‘(a) ESTABLISHMENT.—There is established in the 9 Treasury a fund to be known as the ‘Transportation Block 10 Grant Fund’ consisting of such amounts as may be appro- 11 priated or credited to the fund as provided in this section 12 or section 9602(b). 13 ‘‘(b) TRANSFER TO FUND.—There is hereby appro- 14 priated to the fund such amounts as the Secretary esti- 15 mates are equivalent to the increase in revenue received 16 in the Treasury by reason of the enactment of title I of 17 the Surface Transportation Investment Act of 2019, and 18 the amendments made thereby. 19 ‘‘(c) EXPENDITURES FROM THE FUND.—Amounts in 20 the fund shall be available for making grants under the 21 surface transportation block grant program established 22 under section 133 of title 23, United States Code.’’. 23 VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS 11 •HR 880 IH (b) CLERICAL AMENDMENT.—The table of sections 1 for subchapter A of chapter 98 of such Code is amended 2 by adding at the end the following new item: 3 ‘‘Sec. 9512. Transportation Block Grant Fund.’’. Æ VerDate Sep 11 2014 03:54 Feb 08, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H880.IH H880 kjohnson on DSK79L0C42 with BILLS